There are still reasons to be cheerful about M&amp;S

Was that profit taking or disappointment over the clothing performance we saw yesterday at Marks & Spencer?

Was that profit taking or disappointment over the clothing performance we saw yesterday at Marks & Spencer?

On the positive side, the non-food sectors have returned to growth in the first quarter after a dip into negative territory in the final quarter of last year. Per Una is still on song and the new linen collections have gone down a storm in the current sticky weather.

The negatives were that if you strip out the benefits of Easter the like-for-like sales growth of 2.8 per cent was hardly inspiring and M&S admitted that it was only holding its market share in clothing.

Home furnishings looked disappointing with a 1.4 per cent fall in sales but this was due to a policy of ending discounts as the company prepares for the brave new world under Vittorio Radice.

But there are several reasons to be cheerful about M&S. In food the business is going great guns and has found new engines of growth such as the Simply Food stores that are being opened at the rate of one a month.

In home furnishings M&S is going all out to grab a bigger slice of this fragmented market and must have a decent chance of success as long as it can modify its prices, which are currently too high. In financial services M&S must have huge scope for growth given the strength of its brand and the potentially low cost of customer acquisition. So far, though this area has been under-exploited and M&S has allowed rivals such as Tesco to grab huge chunks of markets like motor insurance. A new credit card-cum-loyalty card is being trialled in Wales but M&S ought to be able to come up with more than this.

In the key clothing sector, various sub-brands are being introduced to sit alongside names like Blue Harbour and Autograph. A new SP "urban style" range for men will be launched in the autumn to cater for dads who still want to be lads. For women the Limited Collection of smart casualwear will be extended from 50 stores to 75. On a price-earnings ratio of 13 the shares look a solid hold.

Doff Icap and take the profits

Icap is a company whose highly charged employees famously like to party on a grand scale, and, according to recent statements from the inter-dealer broker, they have a lot to celebrate.

Icap's shares have soared 60 per cent in the past year, it has grown market share and margins have improved. In a statement ahead of its annual general meeting yesterday it said 2003 had started well, with business levels higher than this time last year and ahead of its own forecasts.

As an inter-dealer broker, Icap brings together buyers and sellers of bonds, foreign exchange and complex derivative products, favoured by investment banks and increasingly the investment of choice of sophisticated retail punters.

It is a lucrative but opaque world and recently Icap has been more in the news for its famous feud with arch rival Cantor Fitzgerald. A string of court cases between the two have detailed the high rolling lifestyle of a significant number of the City's money brokers.

However, the court battles do not appear to have distracted Icap from its aim of becoming number one or two on all of its key markets. The acquisition of BrokerTec, a hi-tech brokerage, is also bedding down well. Last month Icap reported its share of the US Treasury market - where BrokerTec operates - had grown from practically nothing to 45 per cent.

Cantor - its main opponent in US Treasuries - launched yet another court case against Icap over BrokerTec, claiming it infringes a patent, Even if successful, this should delay rather than diminish expected benefits from the deal.

Ongoing stock market volatility coupled with the fact that investors are set to make more use of the complicated instruments Icap specialises in will only swell its pockets further. But the market seems to have fully factored the ongoing upside into the shares, which closed down 6.5p at 1243.6p. The forward p/e of 15 looks reasonably demanding. Take profits.

Peacocks looks poised to fly higher

One analyst issued a research note on Peacocks yesterday entitled "The stairway to heaven" and if you look at the share price chart you can see why. Boosted by the £75m takeover of rival discount chain Bon Marche, the group has really started to motor.

In the three months to 29 June, group like-for-like sales were up 10.8 per cent on the same period last year, with like-for-like gross profit up 9.1 per cent. The blast of hot weather in the past few weeks has given further impetus to sales as shoppers flock for skimpy fashion tops and the like.

At the core Peacocks chain which caters for younger budget-conscious customers, underlying sales are up 8 per cent, with a refurbishment programme delivering significant sales uplifts across the 106 stores given the treatment.

Peacocks is also benefiting from a decision to move into more fashion-oriented clothing as opposed to bog-standard cheapo gear.

Bon Marche sits well alongside the main chain, catering for the 60-plus consumer while more fashionable ranges have been introduced for the young at heart. Like-for-like sales are up a thumping 15.5 per cent, showing the advantage of being in a market with limited competition.

Is it all as good as it's cracked up to be? Not quite. The company itself reminds shareholders that last year's comparative figures were weak so this flatters the figures issued yesterday. It also warns that the overall trading environment remains highly competitive.

Even so, prospects look good. On Evolution Beeson Gregory's current year profit forecast of £32.5m, the shares - up 8p at 160p yesterday - trade on an undemanding p/e of 8. Buy.